Another Call for a Jubilee
Mar 07, 2009
This comes from Dow Theory Analysis for February 22, 2009. You would need a subscription to read it directly off the site, but thanks to a friend/reader, I get to read it and pass on a portion of it to you.
The article speaks of . . .
. . . a massive dollar denominated debt load around the world. This demand is fueled by a deflationary fire that will not be extinguished by printing countless quantities of fiat currencies as Mr. Bernanke so foolishly believed. His flip remark about having a printing press, and knowing how to use it, will keep him up many nights over the coming years.
The Fed continues to print money and issue credit for people who can't qualify and can't pay what they presently owe. I believe this will go down in financial history as one of the worst policy decisions since Nero decided to fiddle while Rome burned around him.
Credit is not the solution. Debt elimination is the only solutions. Incomes are shrinking by the minute so debt must be reduced to the point where present income can support a payment, and only then will income begin to stabilize. The only way to eliminate debt is to write it off. Let the banks sink! Don't give them more money that will never see the light of day in the US economy. The US must write down/off bad mortgages so the economy bottoms, and then the rest of the world must begin to write off US debt as it will never be paid. If Bernanke prints the paper to pay it, it will destroy the US economy, the dollar, and take the rest of the world with it. If he doesn't, the US and the world will fall deeper into a bottomless deflation. Either way he's a dead man. Write debt down now, go to a gold standard that everyone lives by, and in five years you'll have a decent world economy.
The analyst does not use the biblical term "Jubilee," but in essence, that is what he is saying. But I suspect that things will have to get a whole lot worse before the banks lose the battle for the bailouts. Only when people see another bank bailout as HOPELESS will the power of the big banks be broken forever. That is when men will be in a position to start taking the biblical solution more seriously.